Stock Exchange – The Worlds Major Stock Exchanges

Stock Exchange is an organized platform that offers trading opportunities for stock traders, brokers and investors. It enables these individuals to transact in shares, stocks and other financial products.

There are many other services provided by a stock exchange. Few such facilities are -monetary events like disbursement of dividends and income; and processing issue and delivery of different security types.


Types Of Security Deals On A Stock Exchange

A number of different types of securities are exchanged and traded in a stock exchange.
Few such security-types are – a particular company’s shares, derivatives, fiscal bonds or contracts and collective investments like unit trusts.

Trading Procedure

For transacting a certain security or stock on an existing exchange, it has to get ‘listed’ in the index of that exchange.

The recorded documentation pertaining to each and every transaction proof remains safeguarded in an authorized location. However, nowadays trading does not have to be conducted by being physically present in the location. Internet trading has made stock market actions more accessible to traders and investors. However, only legitimate members of an exchange can trade in stocks and securities.

Primary And Secondary Market

In a stock market, a primary market refers to the section in capital markets which handles issue of new securities. The method of selling new issues to the existing investors is called – ‘underwriting.’ When a company issues a new stock offering, the selling of such an issue is referred to as an IPO (Initial Public Offering). Since new issues see their first sale in the primary market, this market is also called ‘New Issue Market.’ Hence, the primary market is responsible for the creation and expansion of capital in a growing economy.

There are different ways to issue securities in a primary market. Some such procedures are – Rights Issue, Initial Public Offering and Preferential Issue.

The secondary market or the ‘aftermarket’ is the market where financial devices like bonds, stocks, futures and options etc. issued earlier, are purchased and sold. After an initial issue is released in the primary market, the secondary market facilitates trading among investors. Since secondary markets tackle a great assortment of fiscal instruments, it can vary from being illiquid to liquid. Most well-known stock exchanges can be sought as ideal examples of a ‘secondary liquid market.’

To gain a better understanding of this topic, please check out the other articles on this page.